May defendants in civil cases implead in their counterclaims persons
who were not parties to the original complaints? This is the main question to
be answered in this controversy.

The Case

Before us is a Petition for Review[1] under
Rule 45 of the Rules of Court, seeking to nullify the May 22, 2002[2]
and the September 3, 2002 Orders[3] of the
Regional Trial Court (RTC) of Quezon City (Branch 80) in Civil Case No.
Q-00-41103. The decretal portion of the first assailed Order reads:

“WHEREFORE, in the light of the foregoing as earlier stated, the
plaintiff’s motion to dismiss claims is granted. Accordingly, the defendants’
claims against Mr. Lim and Mr. Mariano captioned as their counterclaims are
dismissed.”[4]

The second challenged Order denied petitioners’ Motion for
Reconsideration.

The Facts

Briefly, the origins of the present controversy can be traced to
the Letter of Intent (LOI) executed by both parties on August 11, 1998, whereby
Petitioner Lafarge Cement Philippines, Inc. (Lafarge) -- on behalf of its
affiliates and other qualified entities, including Petitioner Luzon Continental
Land Corporation (LCLC) -- agreed to purchase the cement business of Respondent
Continental Cement Corporation (CCC). On October 21, 1998, both parties
entered into a Sale and Purchase Agreement (SPA). At the time of the foregoing
transactions, petitioners were well aware that CCC had a case pending with the
Supreme Court. The case was docketed as GR No. 119712, entitled Asset
Privatization Trust (APT) v. Court of Appeals and Continental Cement
Corporation.

In anticipation of the liability that the High Tribunal might
adjudge against CCC, the parties, under Clause 2 (c) of the SPA, allegedly
agreed to retain from the purchase price a portion of the contract price in the
amount of P117,020,846.84 -- the equivalent of US$2,799,140. This amount
was to be deposited in an interest-bearing account in the First National City
Bank of New York (Citibank) for payment to APT, the petitioner in GR No.
119712.

However, petitioners allegedly refused to apply the sum to the
payment to APT, despite the subsequent finality of the Decision in GR No.
119712 in favor of the latter and the repeated instructions of Respondent CCC.
Fearful that nonpayment to APT would result in the foreclosure, not just of its
properties covered by the SPA with Lafarge but of several other properties as
well, CCC filed before the Regional Trial Court of Quezon City on June 20,
2000, a “Complaint with Application for Preliminary Attachment” against
petitioners. Docketed as Civil Case No. Q-00-41103, the Complaint prayed,
among others, that petitioners be directed to pay the “APT Retained Amount”
referred to in Clause 2 (c) of the SPA.

Petitioners moved to dismiss the Complaint on the ground that it
violated the prohibition on forum-shopping. Respondent CCC had allegedly made
the same claim it was raising in Civil Case No. Q-00-41103 in another action,
which involved the same parties and which was filed earlier before the
International Chamber of Commerce. After the trial court denied the Motion to
Dismiss in its November 14, 2000 Order, petitioners elevated the matter before
the Court of Appeals in CA-GR SP No. 68688.

In the meantime, to avoid being in default and without prejudice
to the outcome of their appeal, petitioners filed their Answer and Compulsory
Counterclaims ad Cautelam before the trial court in Civil Case No.
Q-00-41103. In their Answer, they denied the allegations in the Complaint.
They prayed -- by way of compulsory counterclaims against Respondent CCC, its
majority stockholder and president Gregory T. Lim, and its corporate secretary
Anthony A. Mariano -- for the sums of (a) P2,700,000 each as actual
damages, (b) P100,000,000 each as exemplary damages, (c) P100,000,000
each as moral damages, and (d) P5,000,000 each as attorney’s fees plus
costs of suit.

Petitioners alleged that CCC, through Lim and Mariano, had filed
the “baseless” Complaint in Civil Case No. Q-00-41103 and procured the Writ of
Attachment in bad faith. Relying on this Court’s pronouncement in Sapugay v.
CA,[5]
petitioners prayed that both Lim and Mariano be held “jointly and solidarily”
liable with Respondent CCC.

On behalf of Lim and Mariano who had yet to file any responsive
pleading, CCC moved to dismiss petitioners’ compulsory counterclaims on grounds
that essentially constituted the very issues for resolution in the instant
Petition.

Ruling of the Trial Court

On May 22, 2002, the Regional Trial Court of Quezon City (Branch
80) dismissed petitioners’ counterclaims for several reasons, among which were
the following: a) the counterclaims against Respondents Lim and Mariano were
not compulsory; b) the ruling in Sapugay was not applicable; and c)
petitioners’ Answer with Counterclaims violated procedural rules on the proper
joinder of causes of action.[6]

Acting on the Motion for Reconsideration filed by petitioners,
the trial court -- in an Amended Order dated September 3, 2002[7]
-- admitted some errors in its May 22, 2002 Order, particularly in its
pronouncement that their counterclaim had been pleaded against Lim and Mariano
only. However, the RTC clarified that it was dismissing the counterclaim
insofar as it impleaded Respondents Lim and Mariano, even if it included CCC.

In their Memorandum, petitioners raise the following issues for
our consideration:

“[a] Whether or
not the RTC gravely erred in refusing to rule that Respondent CCC has no
personality to move to dismiss petitioners’ compulsory counterclaims on
Respondents Lim and Mariano’s behalf.

“[b] Whether or
not the RTC gravely erred in ruling that (i) petitioners’ counterclaims against
Respondents Lim and Mariano are not compulsory; (ii) Sapugay v. Court of
Appeals is inapplicable here; and (iii) petitioners violated the rule on
joinder of causes of action.”[9]

For clarity and coherence, the Court will resolve the foregoing
in reverse order.

The Court’s Ruling

The Petition is meritorious.

First
Issue:

Counterclaims
and

Joinder of Causes of Action.

Petitioners’ Counterclaims

Compulsory

Counterclaims are defined in Section 6 of Rule 6 of the Rules of Civil
Procedure as “any claim which a defending party may have against an opposing
party.” They are generally allowed in order to avoid a multiplicity of suits
and to facilitate the disposition of the whole controversy in a single action,
such that the defendant’s demand may be adjudged by a counterclaim rather than
by an independent suit. The only limitations to this principle are (1) that
the court should have jurisdiction over the subject matter of the counterclaim,
and (2) that it could acquire jurisdiction over third parties whose presence is
essential for its adjudication.[10]

A counterclaim may either be permissive or compulsory. It is
permissive “if it does not arise out of or is not necessarily connected with
the subject matter of the opposing party’s claim.”[11]
A permissive counterclaim is essentially an independent claim that may be filed
separately in another case.

A counterclaim is compulsory when its object “arises out of or is
necessarily connected with the transaction or occurrence constituting the
subject matter of the opposing party’s claim and does not require for its
adjudication the presence of third parties of whom the court cannot acquire
jurisdiction.”[12]

Unlike permissive counterclaims, compulsory counterclaims should
be set up in the same action; otherwise, they would be barred forever. NAMARCO
v. Federation of United Namarco Distributors[13]
laid down the following criteria to determine whether a counterclaim is
compulsory or permissive: 1) Are issues of fact and law raised by the claim and
by the counterclaim largely the same? 2) Would res judicata bar a
subsequent suit on defendant’s claim, absent the compulsory counterclaim rule?
3) Will substantially the same evidence support or refute plaintiff’s claim as
well as defendant’s counterclaim? 4) Is there any logical relation between the
claim and the counterclaim? A positive answer to all four questions would
indicate that the counterclaim is compulsory.

Adopted in Quintanilla v. CA[14]
and reiterated in Alday v. FGU
Insurance Corporation,[15] the
“compelling test of compulsoriness” characterizes a counterclaim as compulsory
if there should exist a “logical relationship” between the main claim and the
counterclaim. There exists such a relationship when conducting separate trials
of the respective claims of the parties would entail substantial duplication of
time and effort by the parties and the court; when the multiple claims involve
the same factual and legal issues; or when the claims are offshoots of the same
basic controversy between the parties.

We shall now examine the nature of petitioners’ counterclaims
against respondents with the use of the foregoing parameters.

Petitioners base their counterclaim on the following allegations:

“Gregory T. Lim and Anthony A. Mariano were the persons responsible
for making the bad faith decisions for, and causing plaintiff to file this
baseless suit and to procure an unwarranted writ of attachment, notwithstanding
their knowledge that plaintiff has no right to bring it or to secure the writ.
In taking such bad faith actions, Gregory T. Lim was motivated by his personal
interests as one of the owners of plaintiff while Anthony A. Mariano was
motivated by his sense of personal loyalty to Gregory T. Lim, for which reason
he disregarded the fact that plaintiff is without any valid cause.

“Consequently, both Gregory T. Lim and Anthony A. Mariano are the
plaintiff’s co-joint tortfeasors in the commission of the acts complained of in
this answer and in the compulsory counterclaims pleaded below. As such they
should be held jointly and solidarily liable as plaintiff’s co-defendants to
those compulsory counterclaims pursuant to the Supreme Court’s decision in
Sapugay v. Mobil.

x x x x x x x
x x

“The plaintiff’s, Gregory T. Lim and Anthony A. Mariano’s bad faith
filing of this baseless case has compelled the defendants to engage the
services of counsel for a fee and to incur costs of litigation, in amounts to
be proved at trial, but in no case less than P5 million for each of them and
for which plaintiff Gregory T. Lim and Anthony A. Mariano should be held
jointly and solidarily liable.

“The plaintiff’s, Gregory T. Lim’s and Anthony A. Mariano’s actions
have damaged the reputations of the defendants and they should be held jointly
and solidarily liable to them for moral damages of P100 million each.

“In order to serve as an example for the public good and to deter
similar baseless, bad faith litigation, the plaintiff, Gregory T. Lim and
Anthony A. Mariano should be held jointly and solidarily liable to the
defendants for exemplary damages of P100 million each.” [16]

The above allegations show that petitioners’ counterclaims for
damages were the result of respondents’ (Lim and Mariano) act of filing the Complaint
and securing the Writ of Attachment in bad faith. Tiu Po v. Bautista[17]
involved the issue of whether the counterclaim that sought moral, actual and
exemplary damages and attorney’s fees against respondents on account of their
“malicious and unfounded” complaint was compulsory. In that case, we held as
follows:

“Petitioners’ counterclaim for damages fulfills the necessary
requisites of a compulsory counterclaim. They are damages claimed to have been
suffered by petitioners as a consequence of the action filed against them.
They have to be pleaded in the same action; otherwise, petitioners would be
precluded by the judgment from invoking the same in an independent action. The
pronouncement in Papa vs. Banaag (17 SCRA 1081) (1966) is in point:

“Compensatory, moral and exemplary damages, allegedly suffered by
the creditor in consequence of the debtor’s action, are also compulsory
counterclaim barred by the dismissal of the debtor’s action. They cannot be
claimed in a subsequent action by the creditor against the debtor.”

“Aside from the fact that petitioners’ counterclaim for damages
cannot be the subject of an independent action, it is the same evidence that
sustains petitioners’ counterclaim that will refute private respondent’s own
claim for damages. This is an additional factor that characterizes petitioners’
counterclaim as compulsory.”[18]

Moreover, using the “compelling test of compulsoriness,” we find
that, clearly, the recovery of petitioners’ counterclaims is contingent upon the
case filed by respondents; thus, conducting separate trials thereon will result
in a substantial duplication of the time and effort of the court and the
parties.

Since the counterclaim for damages is compulsory, it must be set
up in the same action; otherwise, it would be barred forever. If it is filed
concurrently with the main action but in a different proceeding, it would be
abated on the ground of litis pendentia; if filed subsequently, it would
meet the same fate on the ground of res judicata.[19]

Sapugay v. Court of Appeals

Applicable
to the Case at Bar

Sapugay v. Court of Appeals finds application in the
present case. In Sapugay, Respondent Mobil Philippines filed before the
trial court of Pasig an action for replevin against Spouses Marino and Lina
Joel Sapugay. The Complaint arose from the supposed failure of the couple to
keep their end of their Dealership Agreement. In their Answer with
Counterclaim, petitioners alleged that after incurring expenses in anticipation
of the Dealership Agreement, they requested the plaintiff to allow them to get
gas, but that it had refused. It claimed that they still had to post a surety
bond which, initially fixed at P200,000, was later raised to P700,000.

The spouses exerted all efforts to secure a bond, but the bonding
companies required a copy of the Dealership Agreement, which respondent
continued to withhold from them. Later, petitioners discovered that respondent
and its manager, Ricardo P. Cardenas, had intended all along to award the
dealership to Island Air Product Corporation.

In their Answer, petitioners impleaded in the counterclaim Mobil
Philippines and its manager -- Ricardo P. Cardenas -- as defendants. They
prayed that judgment be rendered, holding both jointly and severally liable for
pre-operation expenses, rental, storage, guarding fees, and unrealized profit
including damages. After both Mobil and Cardenas failed to respond to their
Answer to the Counterclaim, petitioners filed a “Motion to Declare Plaintiff
and its Manager Ricardo P. Cardenas in Default on Defendant’s Counterclaim.”

Among the issues raised in Sapugay was whether Cardenas,
who was not a party to the original action, might nevertheless be impleaded in
the counterclaim. We disposed of this issue as follows:

“A counterclaim is defined as any claim for money or other relief
which a defending party may have against an opposing party. However, the
general rule that a defendant cannot by a counterclaim bring into the action
any claim against persons other than the plaintiff admits of an exception under
Section 14, Rule 6 which provides that ‘when the presence of parties other than
those to the original action is required for the granting of complete relief in
the determination of a counterclaim or cross-claim, the court shall order them
to be brought in as defendants, if jurisdiction over them can be obtained.’ The
inclusion, therefore, of Cardenas in petitioners’ counterclaim is sanctioned by
the rules.”[20]

The prerogative of bringing in new parties to the action at any
stage before judgment is intended to accord complete relief to all of them in a
single action and to avert a duplicity and even a multiplicity of suits
thereby.

In insisting on the inapplicability of Sapugay,
respondents argue that new parties cannot be included in a counterclaim, except
when no complete relief can be had. They add that “[i]n the present case,
Messrs. Lim and Mariano are not necessary for petitioners to obtain complete
relief from Respondent CCC as plaintiff in the lower court. This is because
Respondent CCC as a corporation with a separate [legal personality] has the
juridical capacity to indemnify petitioners even without Messrs. Lim and
Mariano.”[21]

We disagree. The inclusion of a corporate officer or stockholder
-- Cardenas in Sapugay or Lim and Mariano in the instant case -- is not
premised on the assumption that the plaintiff corporation does not have the
financial ability to answer for damages, such that it has to share its
liability with individual defendants. Rather, such inclusion is based on the
allegations of fraud and bad faith on the part of the corporate officer or
stockholder. These allegations may warrant the piercing of the veil of
corporate fiction, so that the said individual may not seek refuge therein, but
may be held individually and personally liable for his or her actions.

In Tramat Mercantile v. Court of Appeals,[22]the Court held that generally, it should only be the corporation that could
properly be held liable. However, circumstances may warrant the inclusion of
the personal liability of a corporate director, trustee, or officer, if the
said individual is found guilty of bad faith or gross negligence in directing
corporate affairs.

Remo Jr. v. IAC[23] has
stressed that while a corporation is an entity separate and distinct from its
stockholders, the corporate fiction may be disregarded if “used to defeat
public convenience, justify a wrong, protect fraud, or defend crime.” In these
instances, “the law will regard the corporation as an association of persons,
or in case of two corporations, will merge them into one.” Thus, there is no
debate on whether, in alleging bad faith on the part of Lim and Mariano the
counterclaims had in effect made them “indispensable parties” thereto; based on
the alleged facts, both are clearly parties in interest to the counterclaim.[24]

Respondents further assert that “Messrs. Lim and Mariano cannot
be held personally liable [because their assailed acts] are within the powers
granted to them by the proper board resolutions; therefore, it is not a
personal decision but rather that of the corporation as represented by its
board of directors.”[25] The
foregoing assertion, however, is a matter of defense that should be threshed
out during the trial; whether or not “fraud” is extant under the circumstances
is an issue that must be established by convincing evidence.[26]

Suability and liability are two distinct matters. While the
Court does rule that the counterclaims against Respondent CCC’s president and
manager may be properly filed, the determination of whether both can in fact be
held jointly and severally liable with respondent corporation is entirely
another issue that should be ruled upon by the trial court.

However, while a compulsory counterclaim may implead persons not
parties to the original complaint, the general rule -- a defendant in a
compulsory counterclaim need not file any responsive pleading, as it is deemed
to have adopted the allegations in the complaint as its answer -- does not
apply. The filing of a responsive pleading is deemed a voluntary submission to
the jurisdiction of the court; a new party impleaded by the plaintiff in a
compulsory counterclaim cannot be considered to have automatically and
unknowingly submitted to the jurisdiction of the court. A contrary ruling
would result in mischievous consequences whereby a party may be
indiscriminately impleaded as a defendant in a compulsory counterclaim; and
judgment rendered against it without its knowledge, much less participation in
the proceedings, in blatant disregard of rudimentary due process requirements.

The correct procedure in instances such as this is for the trial
court, per Section 12 of Rule 6 of the Rules of Court, to “order [such
impleaded parties] to be brought in as defendants, if jurisdiction over them
can be obtained,” by directing that summons be served on them. In this manner,
they can be properly appraised of and answer the charges against them. Only
upon service of summons can the trial court obtain jurisdiction over them.

In Sapugay, Cardenas was furnished a copy of the Answer
with Counterclaim, but he did not file any responsive pleading to the
counterclaim leveled against him. Nevertheless, the Court gave due
consideration to certain factual circumstances, particularly the trial court’s
treatment of the Complaint as the Answer of Cardenas to the compulsory
counterclaim and of his seeming acquiescence thereto, as evidenced by his
failure to make any objection despite his active participation in the
proceedings. It was held thus:

“It is noteworthy that Cardenas did not file a motion to dismiss
the counterclaim against him on the ground of lack of jurisdiction. While it
is a settled rule that the issue of jurisdiction may be raised even for the
first time on appeal, this does not obtain in the instant case. Although it was
only Mobil which filed an opposition to the motion to declare in default, the
fact that the trial court denied said motion, both as to Mobil and Cardenas on
the ground that Mobil’s complaint should be considered as the answer to
petitioners’ compulsory counterclaim, leads us to the inescapable conclusion
that the trial court treated the opposition as having been filed in behalf of
both Mobil and Cardenas and that the latter had adopted as his answer the
allegations raised in the complaint of Mobil. Obviously, it was this
ratiocination which led the trial court to deny the motion to declare Mobil and
Cardenas in default. Furthermore, Cardenas was not unaware of said incidents
and the proceedings therein as he testified and was present during trial, not to
speak of the fact that as manager of Mobil he would necessarily be interested
in the case and could readily have access to the records and the pleadings
filed therein.

“By adopting as his answer the allegations in the complaint which
seeks affirmative relief, Cardenas is deemed to have recognized the
jurisdiction of the trial court over his person and submitted thereto. He may
not now be heard to repudiate or question that jurisdiction.”[27]

Such factual circumstances are unavailing in the instant case.
The records do not show that Respondents Lim and Mariano are either aware of
the counterclaims filed against them, or that they have actively participated
in the proceedings involving them. Further, in dismissing the counterclaims
against the individual respondents, the court a quo -- unlike in Sapugay
-- cannot be said to have treated Respondent CCC’s Motion to Dismiss as having
been filed on their behalf.

Rules on Permissive Joinder of Causes

of
Action or Parties Not Applicable

Respondent CCC contends that petitioners’ counterclaims violated
the rule on joinder of causes of action. It argues that while the original
Complaint was a suit for specific performance based on a contract, the
counterclaim for damages was based on the tortuous acts of respondents.[28]
In its Motion to Dismiss, CCC cites Section 5 of Rule 2 and Section 6 of Rule 3
of the Rules of Civil Procedure, which we quote:

“Section 5. Joinder of causes of action. – A party
may in one pleading assert, in the alternative or otherwise, as many causes of
action as he may have against an opposing party, subject to the following
conditions:

(a) The party joining the causes of action shall comply with the
rules on joinder of parties; x x x”

Section 6. Permissive joinder
of parties. – All persons in whom or against whom any right to relief in
respect to or arising out of the same transaction or series of transactions is alleged to exist whether
jointly, severally, or in the alternative, may, except as otherwise provided in
these Rules, join as plaintiffs or be joined as defendants in one complaint,
where any question of law or fact common to all such plaintiffs or to all such
defendants may arise in the action; but the court may make such orders as may
be just to prevent any plaintiff or defendant from being embarrassed or put to
expense in connection with any proceedings in which he may have no interest.”

The foregoing procedural rules are founded on practicality and
convenience. They are meant to discourage duplicity and multiplicity of suits.
This objective is negated by insisting -- as the court a quo has done --
that the compulsory counterclaim for damages be dismissed, only to have it
possibly re-filed in a separate proceeding. More important, as we have stated
earlier, Respondents Lim and Mariano are real parties in interest to the
compulsory counterclaim; it is imperative that they be joined therein. Section
7 of Rule 3 provides:

“Compulsory joinder of indispensable parties. – Parties in
interest without whom no final determination can be had of an action shall be
joined either as plaintiffs or defendants.”

Moreover, in joining Lim and Mariano in the compulsory
counterclaim, petitioners are being consistent with the solidary nature of the
liability alleged therein.

Second
Issue:

CCC’s Personality
to Move to Dismiss

the Compulsory Counterclaims

Characterizing their counterclaim for damages against Respondents
CCC, Lim and Mariano as “joint and solidary,” petitioners prayed:

“WHEREFORE, it is respectfully prayed that after trial judgment be
rendered:

“1. Dismissing
the complaint in its entirety;

“2. Ordering the
plaintiff, Gregory T. Lim and Anthony A. Mariano jointly and solidarily to pay
defendant actual damages in the sum of at least P2,700,000.00;

Obligations may be classified as either joint or solidary.
“Joint” or “jointly” or “conjoint” means mancum or mancomunada or
pro rata obligation; on the other hand, “solidary obligations” may be used
interchangeably with “joint and several” or “several.” Thus, petitioners’ usage
of the term “joint and solidary” is confusing and ambiguous.

The ambiguity in petitioners’
counterclaims notwithstanding, respondents’ liability, if proven, is solidary.
This characterization finds basis in Article 1207 of the Civil Code, which
provides that obligations are generally considered joint, except when otherwise
expressly stated or when the law or the nature of the obligation requires
solidarity. However, obligations arising from tort are, by their nature,
always solidary. We have assiduously maintained this legal principle as early
as 1912 in Worcester v. Ocampo,[30]in
which we held:

“x x x The difficulty in the contention of the appellants is that
they fail to recognize that the basis of the present action is tort. They fail
to recognize the universal doctrine that each joint tort feasor is not only
individually liable for the tort in which he participates, but is also jointly
liable with his tort feasors. x x x

“It may be stated as a general rule that joint tort feasors are all
the persons who command, instigate, promote, encourage, advise, countenance,
cooperate in, aid or abet the commission of a tort, or who approve of it after
it is done, if done for their benefit. They are each liable as principals, to
the same extent and in the same manner as if they had performed the wrongful
act themselves. x x x

“Joint tort feasors are jointly and severally liable for the tort
which they commit. The persons injured may sue all of them or any number less
than all. Each is liable for the whole damages caused by all, and all together
are jointly liable for the whole damage. It is no defense for one sued alone,
that the others who participated in the wrongful act are not joined with him as
defendants; nor is it any excuse for him that his participation in the tort was
insignificant as compared to that of the others. x x x

“Joint tort feasors are not liable pro rata. The damages
can not be apportioned among them, except among themselves. They cannot insist
upon an apportionment, for the purpose of each paying an aliquot part. They
are jointly and severally liable for the whole amount. x x x

“A payment in full for the damage done, by one of the joint tort feasors,
of course satisfies any claim which might exist against the others. There can
be but satisfaction. The release of one of the joint tort feasors by agreement
generally operates to discharge all. x x x

“Of course the court during trial may find that some of the alleged
tort feasors are liable and that others are not liable. The courts may release
some for lack of evidence while condemning others of the alleged tort feasors.
And this is true even though they are charged jointly and severally.”

In a “joint” obligation, each obligor answers only for a part of
the whole liability; in a “solidary” or “joint and several” obligation, the
relationship between the active and the passive subjects is so close that each
of them must comply with or demand the fulfillment of the whole obligation.[31]
The fact that the liability sought against the CCC is for specific performance
and tort, while that sought against the individual respondents is based solely
on tort does not negate the solidary nature of their liability for tortuous
acts alleged in the counterclaims. Article 1211 of the Civil Code is explicit
on this point:

“Solidarity may exist although the creditors and the debtors may
not be bound in the same manner and by the same periods and conditions.”

The solidary character of respondents’ alleged liability is
precisely why credence cannot be given to petitioners’ assertion. According to
such assertion, Respondent CCC cannot move to dismiss the counterclaims on
grounds that pertain solely to its individual co-debtors.[32]
In cases filed by the creditor, a solidary debtor may invoke defenses arising
from the nature of the obligation, from circumstances personal to it, or even
from those personal to its co-debtors. Article 1222 of the Civil Code
provides:

“A solidary debtor may, in actions filed by the creditor, avail
itself of all defenses which are derived from the nature of the obligation and
of those which are personal to him, or pertain to his own share. With
respect to those which personally belong to the others, he may avail himself
thereof only as regards that part of the debt for which the latter are
responsible.” (Emphasis supplied).

The act of Respondent CCC as a solidary debtor -- that of filing
a motion to dismiss the counterclaim on grounds that pertain only to its
individual co-debtors -- is therefore allowed.

However, a perusal of its Motion to Dismiss the counterclaims
shows that Respondent CCC filed it on behalf of Co-respondents Lim and Mariano;
it did not pray that the counterclaim against it be dismissed. Be that as it
may, Respondent CCC cannot be declared in default. Jurisprudence teaches that
if the issues raised in the compulsory counterclaim are so intertwined with the
allegations in the complaint, such issues are deemed automatically joined.[33]
Counterclaims that are only for damages and attorney’s fees and that arise from
the filing of the complaint shall be considered as special defenses and need
not be answered.[34]

CCC’s Motion to Dismiss the

Counterclaim on Behalf of

Respondents Lim and

Mariano
Not Allowed

While Respondent CCC can move to dismiss the counterclaims
against it by raising grounds that pertain to individual defendants Lim and
Mariano, it cannot file the same Motion on their behalf for the simple reason
that it lacks the requisite authority to do so. A corporation has a legal
personality entirely separate and distinct from that of its officers and cannot
act for and on their behalf, without being so authorized. Thus, unless
expressly adopted by Lim and Mariano, the Motion to Dismiss the compulsory
counterclaim filed by Respondent CCC has no force and effect as to them.

2. The counterclaims
may properly implead Respondents Gregory T. Lim and Anthony A. Mariano, even if
both were not parties in the original Complaint.

3. Respondent CCC
or any of the three solidary debtors (CCC, Lim or Mariano) may include, in a
Motion to Dismiss, defenses available to their co-defendants; nevertheless, the
same Motion cannot be deemed to have been filed on behalf of the said
co-defendants.

4. Summons must be
served on Respondents Lim and Mariano before the trial court can obtain
jurisdiction over them.

WHEREFORE, the Petition is GRANTED and the assailed Orders
REVERSED. The court of origin is hereby ORDEREDto take
cognizance of the counterclaims pleaded in petitioners’ Answer with Compulsory
Counterclaims and to cause the service of summons on Respondents Gregory T. Lim
and Anthony A. Mariano. No costs.

[8] This
case was deemed submitted for decision on November 13, 2003, upon receipt by
this Court of Petitioners’ Memorandum signed by Atty. Norma Margarita B.
Patacsil of the Sycip Salazar Hernandez & Gatmaitan Law Firm. Respondent
CCC’s Memorandum, signed by Attys. Rodolf C. Britanico and Melanie T. Chua of
the Pangilinan Britanico Sarmiento & Franco Law Offices, was received by
the Court on October 10, 2003.

“Real party-in-interest. A
real party in interest is the party who stands to be benefited or injured by
the judgment in the suit or the party entitled to the avails of the suit.
Unless otherwise authorized by law or these Rules, every action must be
prosecuted or defended in the name of the real party in interest.”

Section 7 of Rule 3 of the 1997
Rules of Civil Procedure:

“Compulsory
Joinder of indispensable parties. Parties in interest without whom no final
determination can be had of an action shall be joined either as plaintiffs or
defendants.”

“The concurrence of two or more
creditors or of two or more debtors in one and the same obligation does not
imply that each one of the former has a right to demand, or that each one of
the latter is bound to render, entire compliance with the prestation. There is
a solidary liability only when the obligation expressly so states, or when the
law or the nature of the obligation requires solidarity.”

[32] The
grounds raised by Respondent CCC in its Motion to Dismiss the counterclaim
solely pertain to Lim and Mariano:

a) Lim and Mariano were not parties to the original
Complaint and cannot therefore be impleaded in the counterclaim.

b) Lim and Mariano were mere officials of CCC; their
assailed acts, done by virtue of a Board Resolution, were corporate acts for
which they cannot be made personally liable. (Motion to Dismiss dated December
29, 2001; rollo, pp. 220-225.